Tata Power focuses on countries in the South Asian Association for Regional Cooperation, comprising Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.

Potential for growth

To identify investment opportunities, the company is partnering with Norway’s SN Power for hydroelectric power projects in India and Nepal. They expect to harvest an immense amount of renewable energy from the Himalayas, according to Tata Power Executive Director Ashok Sethi.

Tata Power already has the 126MW Dagachhu hydroelectric plant in Bhutan, and is developing double that capacity in wind turbines. It has also completed financing for its share in a 187MW joint venture on the Adjaristsqali River, in Georgia.

GMR Energy, a rival of Tata Power, has invested in two hydroelectric projects in Nepal, while Indian energy conglomerate NTPC has been more active in thermal power.

Building a grid

In October, SAARC members reached a consensus on regional grid connectivity after four years of negotiations. The agreement puts special emphasis on harnessing renewable energy sources.

“SAARC is a robust market, but constraints are primarily on the supply side as there are pockets where deficits persist,” Indian Power Minister Piyush Goyal said. “Economic sustainability of the SAARC region is based on energy security as 30% of the region’s energy demands are met through imports. This will strengthen the economic ties among the SAARC nations.”

For now, intra-SAARC energy trading consists of bilateral arrangements rather than anything regional. India imports 1,450MW of hydroelectric power from Bhutan and another 150MW from Nepal. It also exports 500MW of electricity to Bangladesh.

The region has the potential to generate 250,000MW of hydropower alone, and an abundance of mountainous and desert topography means the region is capable of harnessing wind and solar sources. Most countries, though, remain energy deficient, and they rely on thermal power.

“The idea [of a common energy grid] makes a lot of sense intuitively. Bangladesh, Nepal and Bhutan have great potential for energy generation, and they can make money. It will help to optimize [business opportunities by putting] a proper grid in place, and it will smooth the process of energy cooperation,” said Amit Bhandari, an energy and environment scholar at Gateway House, a private Indian think tank.

Obstacles remain

Political unrest within some SAARC countries and volatile bilateral relations among some have kept the private sector away for a long time.

India is increasingly looking at Himalayan nations such as Bhutan and Nepal to meet its electricity needs through hydropower. While the India-Bhutan partnership has been successful, India has not been able to make much progress in energy trading with Nepal, owing to political unrest in that region.

As for cooperation with other countries in the region, there is a proposal to lay undersea cables across the Indian Ocean to transmit electricity generated from windmills in the south Indian state of Tamil Nadu to Sri Lanka.

Bhandari said India and Pakistan could be ideal partners for solar energy cooperation because of their vast shared desert region, but political realities are acting as a deterrent.

India is the largest power consumer in SAARC, followed by Pakistan and Bangladesh. Its electricity demand is likely to exceed 200 gigawatts by 2021-22, and peak demand will reach 295GW over the same period. The country’s electricity generation capacity was 267GW as of March, of which 27.25% was from renewable power sources.

According to the International Energy Agency, the Indian government’s policy reforms over the past 20 years have shifted the country’s energy sector from a predominantly government-owned system toward one based on market principles, offering a more level playing field for both public and private entities.